Bond Math

budge budge at el-pleasant.org
Fri Oct 25 12:06:00 PDT 2002


On Fri, 25 Oct 2002 at 10:49am Daniel Davies wrote:
>
> So yeh, basically, the product of the probability of
> default and the loss in event of default ought to be
> such as to make the expected return on a C-Bond equal to
> the expected return on a Treasury bond (plus a small
> residual risk premium of maybe 1-2% for various
> technical reasons). I haven't checked Michael's
> multiplication but it looks right.

Has anybody heard Stglitz's talk advocating default/bankruptcy of some of the debtor countires? I heard him on some PBS show in the last month or so, but I only caught a little bit of it. It sounded not unlike what you outlined here once some time ago and reminded me of that convo...

-- no Onan



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